The duration of zero-coupon bonds will be ____ the duration of coupon bonds with the same maturity.
A)lower than
B)higher than
C)the same as
D)either a or b (depending on the size of the coupon payment)

Question

Quizplus · Accepted Answer

The duration of zero-coupon bonds is higher than that of coupon bonds with the same maturity because zero-coupon bonds pay no coupons and their entire value comes at maturity, making their sensitivity to interest rate changes higher.

The Duration of Zero-Coupon Bonds Will Be ____ the Duration